Sewer system issues halt development of Lancaster County apartments at Rockvale

• By Chad Umble / LNP | LancasterOnline

A multi-million-dollar problem lurking underground has stalled the $120 million redevelopment of once bustling outlet mall Rockvale into a slimmed-down shopping center with nearly 500 new apartments.

Subterranean sewer pipes that are several inches too small have surfaced as the primary reason construction of the planned apartment buildings has been delayed. Upgrading the cast iron sewer pipes from the 1970s could cost $3 million, an outlay that would be added to the growing price tag for the project’s developer, a New Jersey-based privately held company called Fernmoor.

As a result of the unexpected sewer expense, Fernmoor has halted work on the project and is asking township officials to help it save money elsewhere by easing some of its building and zoning requirements, including asking for breaks on a traffic study, streetscape improvements and a requirement to contribute to a parks fund.

“The reality is that the project can only bear so much cost before it just can’t go forward,” Claudia Shank, an attorney representing Fernmoor said at a June 16 East Lampeter Township supervisors meeting where she sought some concessions.

Eager to see part of a beleaguered shopping center become much needed new housing, township officials have accommodated some of Fernmoor’s requests to ease up on land development requirements. In response to Shank’s request at their June meeting, supervisors have indicated a willingness to waive requirement for a traffic study and reduce a $440,000 fee for parkland, both of which are expected to be formally considered at the supervisors’ Aug. 4 meeting.

“Several people have looked at it and tried (to redevelop Rockvale) and have not moved forward. The township has worked very hard to make as many reasonable accommodations as we can to encourage that to be redeveloped,” supervisors Chairman Ethan Demme told LNP | LancasterOnline.

Demme said he is confident that Fernmoor can get some more clarity soon about when it can resume work on its construction plans, saying Fernmoor may be able to get grants to help pay for the sewer upgrades.

“No one can move in until we upgrade the sewer line, and they know that, so they have to figure out where that money is coming from,” Demme said.

Fernmoor President Jeffrey Fernbach declined to comment for this story.

New direction for Rockvale

Begun in 1986 with 11 stores as Rockvale Square Outlet, the Route 30 shopping center eventually had more than 120 stores, becoming a shopping destination for tourists and locals. But in recent years, vacancies have outnumbered stores at the 65-acre center where there were 86 tenants in 2010, 72 in 2015 and only 32 today.

Eager to keep Rockvale’s empty storefronts from becoming a permanent eyesore, township supervisors crafted a zoning change that would allow Rockvale’s owner to replace some stores with apartments. Such a conversion of a shopping center to housing complex would be a first in Lancaster County.

In December 2022, Fernmoor bought Rockvale for $30.5 million from Wharton Realty Group, which had secured a zoning change to allow the construction of apartments but didn’t follow through on the plan.

Based in Jackson, New Jersey, Fernmoor has developed and managed 93 buildings with more than 4,600 residential units since its founding in 2009. On its website, Fernmoor says it has “a 100% track record of project build-out and successful disposition.”

While Fernmoor has a track record of building and managing large residential and commercial projects, it has not previously done a project like Rockvale – the replacement of stores with apartments.

At Rockvale, Fernmoor has outlined plans that had it replacing half the 537,000 square feet of commercial space with 13 four-story apartment buildings totalling 416 units. With the encouragement of township officials eager to see new housing in the township, Fernmoor boosted the total number of apartments to 480.

Initially, Fernbach estimated that it could take a year to get the necessary approvals. And he originally thought some demolition could happen in the fall of 2023 – a full year before some store buildings were actually knocked down to make way for the apartments.

“Today’s demolition represents the start of our revitalization project in Rockvale and we are thrilled to have the opportunity to address this community’s housing needs with new, luxury apartments,” Fernbach said in a Nov. 14, 2024, press release to mark the demolition of a section of stores in the center of Rockvale.

At the time, however, the full scope of the sewer upgrades needed was not known. The results of that study, which were released in January, show that in order to handle the expected volume from all the planned apartments at Rockvale, about 4,500 linear feet of pipe will need to be replaced.

A “very preliminary” cost estimate for that work is around $2 to $3 million, Tara Hitchens, East Lampeter Township manager, told LNP | LancasterOnline.

The sewer capacity report was discussed at the Jan. 8 meeting of the township sewer authority, which will oversee the completion of the work. The township’s engineer told the authority members that the 8-inch sewer main within Rockvale needs to be upgraded to 10 inches while a 12-inch pipe leaving the site needs to be 15 inches.

At the meeting, sewer authority Chairman Richard Robinson said that there could be some flexibility on how the work is completed, but not on whether it even needs to be done.

“They’re going to have to agree that the upgrades have to be done,” Robinson said.

The sewer authority has told Fernmoor that it will not reduce the fees for connecting to the system in return for the developer upgrading the underground pipes, Shank told township supervisors at their June 16 meeting.

East Lampeter Township’s sewer tapping fees are currently $2,650 per housing unit. The Rockvale property includes credits for 128 connections, but the 352 connections needed for the rest of the planned apartments will cost $932,000.

Shank told supervisors in June that Fernmoor had paused work on the project and wasn’t going to resume until it had a better handle on the total costs. Pursuing grants to help pay for sewer upgrades was even in limbo while there are so many unknowns about the project.

“It’s expensive,” Shank said. “Right now, we don’t know if this project is going to work.”